International Public Goods and Agency Problems in Treaty Organizations

This paper analyzes the extent to which international public goods and agency problems are present in international organizations. A noncooperative model of the funding choices of donor countries and the subsequent policy choices of an international agency is used to develop hypotheses about the behavior of ideal and problematic international agencies. The analysis suggests that international agencies are likely to be underfunded and undermonitored relative to that which maximizes the joint interest of signatory countries. The funding and policy implications of the model are tested using data from the Global Environment Facility (GEF). The statistical results suggest that (i) treaty obligations affect behavior of Annex 1 and non-Annex 1 countries, (ii) GEF’s allocation of grants generally advances the international environmental agenda, and (iii) significant free-riding and agency problems exist in GEF as it is presently organized. Overall, the empirical results suggest that treaty organizations may be relatively effective, if not perfect, instruments of international public policy.